Costa Rica (08/04)

GeographyArea: 51, 100 sq. km (19,730 sq. mi.); about twice the size of the state of Vermont.Cities: Capital--San Jose (greater metropolitan area pop. 2.1 million, the greater metropolitan area as defined by the Ministry of Planning and Economic Policy includes the cities of Alajuela, Cartago, and Heredia). Other major cities outside the San Jose capital area--Puntarenas (102,504), Limon (89,933). (Note: These figures are for the Canton of each city, administrative areas that include the municipality and surrounding areas, rural or urban.)Terrain: A rugged, central range separates the eastern and western coastal plains.Climate: Mild in the central highlands, tropical and subtropical in coastal areas.

GovernmentType: Democratic republic.Independence: September 15, 1821.Constitution: November 7, 1949.Branches: Executive--president (head of government and chief of state) elected for one 4-year term, two vice presidents, Cabinet (15 ministers, one of whom also is vice president). Legislative--57-deputy unicameral Legislative Assembly elected at 4-year intervals. Judicial--Supreme Court of Justice (22 magistrates elected by Legislative Assembly for renewable 8-year terms). The offices of the Ombudsman, Comptroller General, and Procurator General assert autonomous oversight of the government. Subdivisions: Seven provinces, divided into 81 cantons, subdivided into 421 districts.Political parties: Social Christian Unity Party (PUSC), National Liberation Party (PLN), Citizen's Action Party (PAC), Libertarian Movement Party (PML), Costa Rican Renovation Party (PRC).Suffrage: Obligatory at 18.

PEOPLEUnlike many of their Central American neighbors, present-day Costa Ricans are largely of European rather than mestizo descent; Spain was the primary country of origin. However, an estimated 10% to 15% of the population is Nicaraguan, of fairly recent arrival and primarily of mestizo origin. Descendants of 19th-century Jamaican immigrant workers constitute an English-speaking minority and--at 3% of the population--number about 119,000. Few of the native Indians survived European contact; the indigenous population today numbers about 29,000 or less than 1% of the population.

HISTORYIn 1502, on his fourth and last voyage to the New World, Christopher Columbus made the first European landfall in the area. Settlement of Costa Rica began in 1522. For nearly three centuries, Spain administered the region as part of the Captaincy General of Guatemala under a military governor. The Spanish optimistically called the country "Rich Coast." Finding little gold or other valuable minerals in Costa Rica, however, the Spanish turned to agriculture.

The small landowners' relative poverty, the lack of a large indigenous labor force, the population's ethnic and linguistic homogeneity, and Costa Rica's isolation from the Spanish colonial centers in Mexico and the Andes all contributed to the development of an autonomous and individualistic agrarian society. An egalitarian tradition also arose. This tradition survived the widened class distinctions brought on by the 19th-century introduction of banana and coffee cultivation and consequent accumulations of local wealth.

Costa Rica joined other Central American provinces in 1821 in a joint declaration of independence from Spain. Although the newly independent provinces formed a Federation, border disputes broke out among them, adding to the region's turbulent history and conditions. Costa Rica's northern Guanacaste Province was annexed from Nicaragua in one such regional dispute. In 1838, long after the Central American Federation ceased to function in practice, Costa Rica formally withdrew and proclaimed itself sovereign.

An era of peaceful democracy in Costa Rica began in 1899 with elections considered the first truly free and honest ones in the country's history. This began a trend continued until today with only two lapses: in 1917-19, Federico Tinoco ruled as a dictator, and, in 1948, Jose Figueres led an armed uprising in the wake of a disputed presidential election.

With more than 2,000 dead, the 44-day civil war resulting from this uprising was the bloodiest event in 20th-century Costa Rican history, but the victorious junta drafted a constitution guaranteeing free elections with universal suffrage and the abolition of the military. Figueres became a national hero, winning the first election under the new constitution in 1953. Since then, Costa Rica has held 13 presidential elections, the latest in 2002.

GOVERNMENTCosta Rica is a democratic republic with a strong system of constitutional checks and balances. Executive responsibilities are vested in a president, who is the country's center of power. There also are two vice presidents and a 15-member cabinet. The president and 57 Legislative Assembly deputies are elected for 4-year terms. In April 2003, the Costa Rican Constitutional Court annulled a constitutional reform enacted by the legislative assembly in 1969 barring presidents from running for reelection. The law reverted back to the 1949 Constitution, which states that ex-presidents may run for reelection after they have been out of office for two presidential terms, or eight years. Deputies may run for reelection after sitting out one term, or four years.

The electoral process is supervised by an independent Supreme Electoral Tribunal--a commission of three principal magistrates and six alternates selected by the Supreme Court of Justice. Judicial power is exercised by the Supreme Court of Justice, composed of 22 magistrates selected for renewable 8-year terms by the Legislative Assembly, and subsidiary courts. A Constitutional Chamber of the Supreme Court, established in 1989, reviews the constitutionality of legislation and executive decrees and all habeas corpus warrants.

The offices of the Comptroller General of the Republic, the Solicitor General, and the Ombudsman exercise oversight of the government. The Comptroller General's office has a statutory responsibility to scrutinize all but the smallest public sector contracts and strictly enforces procedural requirements.

There are provincial boundaries for administrative purposes, but no elected provincial officials. Costa Rica held its first mayoral elections in December 2002 whereby mayors were elected by popular vote through general elections. Prior to 2002, the office of mayor did not exist and the president of the municipal council was responsible for the administration of each municipality. The most significant change has been to transfer the governing authority from a position filled via an indirect popular vote to one filled by a direct popular vote. Municipal council presidents are elected through internal elections conducted by council members each year, but mayors are elected directly by the populace through general elections. All council members are elected in a general election process. Autonomous state agencies enjoy considerable operational independence; they include the telecommunications and electrical power monopoly, the state petroleum refinery, the nationalized commercial banks, the state insurance monopoly, and the social security agency. Costa Rica has no military and maintains only domestic police and security forces for internal security. A professional Coast Guard was established in 2000.

Principal Government OfficialsPresident--Abel PACHECOForeign Minister--Roberto TOVAR FajaAmbassador to the United States--Jaime DAREMBLUM Rosenstein (to be succeeded by Tomas DUE�OS October 2004)Ambassador to the Organization of American States--Walter NIEHAUSAmbassador to the United Nations--Bruno STAGNO Ugarde

Costa Rica maintains an embassy in the United States at 2114 S Street NW, Washington, DC 20008 (tel. 202-328-6628).

POLITICAL CONDITIONSCosta Rica has long emphasized the development of democracy and respect for human rights. Until recently, the country's political system has contrasted sharply with many of its Central American neighbors; it has steadily developed and maintained democratic institutions and an orderly, constitutional scheme for government succession. Several factors have contributed to this tendency, including enlightened government leaders, comparative prosperity, flexible class lines, educational opportunities that have created a stable middle class, and high social indicators. Also, because Costa Rica has no armed forces, it has avoided the possibility of political intrusiveness by the military that other countries in the region have experienced.

In May 2002, President Abel Pacheco of the Social Christian Union Party (PUSC) assumed office after defeating National Liberation Party (PLN) candidate Rolando Araya in the first-ever second-round runoff election. The April 2002 runoff election was necessitated by the failure of any one candidate to obtain the constitutionally required 40% of the popular vote in the February first-round election. Pacheco has been criticized as having achieved little during the first half of his four-year term, and his declining approval ratings reflect public frustration with his government. In his defense, Pacheco cites achievements in fighting corruption and reducing poverty. He continues to seek a fiscal reform package and can count the successful negotiation of a U.S.-Central America Free Trade Agreement (U.S.-CAFTA) and an improved economy among his significant accomplishments. The 57-member unicameral Legislative Assembly has five principal party factions, with the governing party, PUSC, having only a 19-seat plurality. As a result, legislative action has been slow.

ECONOMYAfter four years of slow economic growth, the Costa Rican economy grew at a healthy 5.6% in 2003, with growth estimates exceeding 4% for 2004. Compared with its Central American neighbors, Costa Rica has achieved a high standard of living, with a per capita income of about U.S. $4,200, and an unemployment rate of 6.7%. The annual inflation rate hovers around 9.4% as the Costa Rican Government seeks to reduce a large fiscal deficit.

Controlling the budget deficit remains the single-biggest challenge for the country's economic policymakers, as interest costs on the accumulated central government consumes the equivalent of 32.1% in 2003 of the government's total revenues. About 18.9% of the national budget was financed by public borrowing. This limits the resources available for investments in the country's deteriorated public infrastructure.

Costa Rica's major economic resources are its fertile land and frequent rainfall, its well-educated population, and its location in the Central American isthmus, which provides easy access to North and South American markets and direct ocean access to the European and Asian Continents. One-fourth of Costa Rica's land is dedicated to national forests, often adjoining picturesque beaches, which has made the country a popular destination for affluent retirees and ecotourists.

Costa Rica used to be known principally as a producer of bananas and coffee. In recent years, Costa Rica has successfully attracted important investments by such companies as Intel Corporation, which employs nearly 2,000 people at its $300 million microprocessor plant; Proctor and Gamble, which employs nearly 1,000 people in its administrative center for the Western Hemisphere; and Abbott Laboratories and Baxter Healthcare from the health care products industry. Manufacturing and industry's contribution to GDP overtook agriculture over the course of the 1990s, led by foreign investment in Costa Rica's free trade zone. Well over half of that investment has come from the United States. Dole and Chiquita have a large presence in the banana industry. Two-way trade exceeded U.S. $6 billion in 2003.

Costa Rica has oil deposits off its Atlantic Coast, but President Pacheco decided not to develop the deposits for environmental reasons. The country's mountainous terrain and abundant rainfall have permitted the construction of a dozen hydroelectric power plants, making it largely self-sufficient in most energy needs, except oil for transportation. Costa Rica exports electricity to Nicaragua and has the potential to become a major electricity exporter if plans for new generating plants and a regional distribution grid are realized. One challenge will be how to secure payment for these exports. Mild climate and trade winds make neither heating nor cooling necessary, particularly in the highland cities and towns where some 90% of the population lives.

Costa Rica's infrastructure has suffered from a lack of maintenance and new investment. The country has an extensive road system of more than 30,000 kilometers, although much of it is in disrepair. Most parts of the country are accessible by road. The main highland cities in the country's Central Valley are connected by paved all-weather roads with the Atlantic and Pacific coasts and by the Pan American Highway with Nicaragua and Panama, the neighboring countries to the North and the South. Costa Rica's ports are struggling to keep pace with growing trade. They have insufficient capacity, and their equipment is in poor condition. The railroad does not function, with the exception of a couple of spurs reactivated by a U.S.-owned banana company. The government opened the ports and the railroad to competitive bidding opportunities for private investment and management, but U.S. companies chose not to participate in this process. Costa Rica has sought to widen its economic and trade ties, both within and outside the region. Costa Rica signed a bilateral trade agreement with Mexico in 1994, which was later amended to cover a wider range of products. Costa Rica joined other Central American countries, plus the Dominican Republic, in establishing a Trade and Investment Council with the United States in March 1998. Costa Rica has signed trade agreements with Canada, Chile, the Dominican Republic, and is negotiating trade agreements with Panama, and Trinidad and Tobago. Costa Rica concluded negotiations with the U.S. to participate in the U.S.-Central America Free Trade Agreement (U.S.-CAFTA) in January 2004. CAFTA is expected to bring about the partial opening of the state telecommunications monopoly beginning in 2006 and a substantial opening of the state-run insurance sector beginning in 2008. CAFTA has not yet been ratified either by the U.S. or Costa Rican legislatures. Costa Rica is an active participant in the negotiation of the hemispheric Free Trade Area of the Americas as well as a member of the Cairns Group, which is pursuing global agricultural trade liberalization within the World Trade Organization.

FOREIGN RELATIONSCosta Rica is an active member of the international community and, in 1993, proclaimed its permanent neutrality. Its record on the environment, human rights, and advocacy of peaceful settlement of disputes give it a weight in world affairs far beyond its size. The country lobbied aggressively for the establishment of the UN High Commissioner for Human Rights and became the first nation to recognize the jurisdiction of the Inter-American Human Rights Court, based in San Jose.

During the tumultuous 1980s, then President Oscar Arias authored a regional peace plan in 1987 that served as the basis for the Esquipulas Peace Agreement. Arias' efforts earned him the 1987 Nobel Peace Prize. Subsequent agreements, supported by the United States, led to the Nicaraguan election of 1990 and the end of civil war in Nicaragua. Costa Rica also hosted several rounds of negotiations between the Salvadoran Government and the Farabundo Marti National Liberation Front (FMLN), aiding El Salvador's efforts to emerge from civil war and culminating in that country's 1994 free and fair elections. Costa Rica has been a strong proponent of regional arms limitation agreements.

With the establishment of democratically elected governments in all Central American nations by the 1990s, Costa Rica turned its focus from regional conflicts to the pursuit of democratic and economic development on the isthmus. It was instrumental in drawing Panama into the Central American development process and participated in the multinational Partnership for Democracy and Development in Central America.

Regional political integration has not proven attractive to Costa Rica. The country debated its role in the Central American integration process under former President Calderon. Costa Rica has sought concrete economic ties with its Central American neighbors rather than the establishment of regional political institutions, and it chose not to join the Central American Parliament. Former President Figueres promoted a higher profile for Costa Rica in regional and international fora. Costa Rica gained election as president of the Group of 77 in the United Nations in 1995.

That term ended in 1997 with the South-South Conference held in San Jose. Costa Rica occupied a nonpermanent seat in the Security Council from 1997 to 1999 and exercised a leadership role in confronting crises in the Middle East and Africa, as well as in the former Republic of Yugoslavia. It is currently a member of the UN Human Rights Commission. Costa Rica hosted the OAS General Assembly in San Jose in 2001 and assumed the presidency of the Rio Group in 2002. Former President Miguel Angel Rodriguez received hemispheric-wide support in his bid for Secretary General of the OAS and was elected to the position by consensus. In November 2004, Costa Rica will host the Ibero-American Summit.

Costa Rica broke relations with Cuba in 1961 to protest Cuban support of leftist subversion in Central America and has not renewed formal diplomatic ties with the Castro regime. Costa Rica established a consular office in Havana in 1995. Cuba opened a consular office in Costa Rica in 2001. Costa Rica temporarily withdrew its Consul General from Havana in 2001, but subsequently allowed his return.

Costa Rica has also signed a three-year agreement with Nicaragua to defer submission to the International Court of Justice an issue of navigational rights on the San Juan River in a border area of the two countries. Meanwhile, the governments of Costa Rica and Nicaragua agreed to work towards an amicable solution and to jointly fund community development projects in the border area.

U.S.-COSTA RICAN RELATIONSThe United States and Costa Rica have a history of close and friendly relations based on respect for democratic government, human freedoms, free trade, and other shared values. The country consistently supports the U.S. in international fora, especially in the areas of democracy and human rights. Costa Rica joined the Coalition for the Immediate Disarmament of Iraq, despite significant domestic opposition, and co-sponsored the Resolution on Cuba at the 60th session of the UN Commission on Human Rights. Law enforcement cooperation, particularly efforts to stem the flow of illegal drugs to the U.S., has been exemplary.

The United States is Costa Rica's most important trading partner. The U.S. accounts for over half of Costa Rica's tourism and more than two-thirds of its foreign investment. The two countries share growing concerns for the environment and want to preserve Costa Rica's important tropical resources and prevent environmental degradation.

The United States responded to Costa Rica's economic needs in the 1980s with significant economic and development assistance programs. Through provision of more than $1.1 billion in assistance, the U.S. Agency for International Development (USAID) supported Costa Rican efforts to stabilize its economy and broaden and accelerate economic growth through policy reforms and trade liberalization. Assistance initiatives in the 1990s concentrated on democratic policies, modernizing the administration of justice, and sustainable development.

For decades, Peace Corps Volunteers have provided technical assistance in the areas of environmental education, natural resources, management, small business development, basic business education, urban youth, and community education. USAID completed a $9 million project in 2000-01 to support refugees of Hurricane Mitch residing in Costa Rica.

Upwards of 20,000 private American citizens, including many retirees, reside in the country and more than 600,000 American citizens visit Costa Rica annually. There have been some vexing issues in the U.S.-Costa Rican relationship, principal among them longstanding expropriation and other U.S. citizen investment disputes, which have hurt Costa Rica's investment climate and produced bilateral tensions. Land invasions from organized squatter groups who target foreign landowners also have occurred, and some have turned violent. The U.S. Government has made clear to Costa Rica its concern that Costa Rican inattention to these issues has left U.S. citizens vulnerable to harm and loss of their property.

The United States and Costa Rica signed the bilateral Maritime Counter-Drug Agreement, the first of its kind in Central America, which entered into force in late 1999. The agreement permits bilateral cooperation on stopping drug trafficking through Costa Rican waters. The agreement has resulted in a growing number of narcotics seizures, illegal fishing cases, and search-and-rescue missions.

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